After March 21, the Ministry of Finance officially launched the First Home Program, which states that citizens of up to 45 years of age can buy a housing with state-guaranteed real estate loans, said journalist Vlad Bercu listed in the program "15 minutes of economic realism" the main risks and benefits of the program.
The First Home Program is required for young families, especially since the 2014 census data showed that 80,000 families are in rent. It is certain that the number of applicants for housing is much higher than the program's possibilities. Finance Minister Octavian Armasu said in an interview that 10,000 people could submit applications within the program without specifying the period.
"It is a good time to launch the First Home Program when interest rates on mortgages are at the lowest rate - 7% free of charge. In addition, apartment prices have stabilized and will not grow in the coming years", says Vlad Bercu.
The benefits of the program are that the beneficiaries contribute only 10%, while the bank's rate is 25%. By government decision, banks' commission was capped at 1%, and the state provided a 50% guarantee of the cost of the credit if the beneficiary of the credit would become incapacitated. At the same time, a government decision reduced certain payments for the registration of the dwelling.
The journalist also identified certain risks in the event of economic instability. "One problem is that some of the recipients of credit might become incapacitated. The Ministry of Finance estimates that 5% would be the share of those who could not pay their payments, which is why the 50 million guarantee for the current year is set. For example, in Romania out of the 200,000 program beneficiaries, only 2% went into default", Bercu said.
"Very many young people who would like to buy a house would not be eligible under the program because state salaries are below the limit accepted by banks and privatized most of the business pay salaries in the envelope," Bercu said.
At the same time, the journalist also draws attention to the interest rate risk, which today is 9.3% annually, but following a crisis, the interest rate could rise overnight. Also, "currency risk should not be neglected. The cost of the apartments is in euro, and in case of depreciation of the leu, the beneficiaries of the loans will have to make more money out of their pocket. The very cheap loans for real estate in the time of stability under a financial crisis like in the US left thousands of people homeless. In such a situation, the Government's guarantee might be insufficient to cover the risks of commercial banks.
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